Law report: 7 OCTOBER 1997; Secretary of State cannot claim report is privileged

The Secretary of State for Trade and Industry was not entitled to claim privilege on an application for disclosure of a report on the conduct of company directors, prepared by office holders pursuant to the duty imposed on them by section 7(3) of the Company Directors Disqualification Act 1986.

The court ordered that the Secretary of State for Trade and Industry should disclose to the applicant, Andrew Tuckey, the contents of a report prepared by the administrators of Barings plc in connection with proceedings against him under the Company Directors Disqualification Act 1986.

Following the collapse of Barings Bank in February 1995 its holding company, Barings plc, and a number of its subsidiaries, were placed in administration. A report to the Secretary of State for Trade and Industry was prepared on behalf of the administrators, in compliance with the duty imposed on them by section 7(3) of the Company Directors Disqualification Act 1986 to make such a report if it appeared to them that the conduct of directors of the company made them unfit to be concerned in the management of a company.

Disqualification proceedings were commenced against ten former directors of the Barings companies, of whom the most senior was the applicant. The applicant applied by summons pursuant to RSC Order 24, rule 11 requiring the production of a number of documents including the report.

Sir Richard Scott, V-C, said that the Secretary of State resisted inspection of the report on the twin grounds of privilege and lack of sufficient relevance. It was argued that the contents of the report were not such as to satisfy the criterion of necessity for fairness or saving of costs set out in RSC Order 24, rule 13(1). The criterion was, however, satisifed on both counts, and unless the report was protected by privilege, its production would be ordered.

The rules of discovery, which required relevant documents available to one litigant also to be made available to the other litigants, were intended to assist and make more likely the achieving of a just result in litigation. It was, however, recognised and established by authority that in some circumstances a greater public interest would override the right of a litigant to obtain relevant documents from his opponent. One such public interest was that individuals should be able to consult their lawyers in the certain knowledge that communications between them would be immune from compulsory disclosure.

The report did not in any sense constitute a communication between the Secretary of State and her legal advisers, but it was argued on her behalf that out of legal professional privilege there had grown a sub-species, sometimes referred to as litigation privilege, which protected from compulsory disclosure any document brought into existence for the purpose of litigation, actual, contemplated, or simply prospective, into which the report fell.

It was submitted that every document was protected by privilege if it had been brought into existence for the sole or dominant purpose of use in litigation, whether or not disclosure of it might impinge upon the invioliability of lawyer/ client communications. The authorities, did not, however, require the court to adopt that approach. None of the cases relied on had involved a statutory report. They were cases in which the maker of the document had a choice whether or not to bring it into existence. In the case of a statutory report the maker had no choice. The question whether section 7(3) reports were to be protected by legal professional privilege was not to be determined by reference to the purpose of the makers, nor by their expectations as to the use that would be made of them.

The question depended, rather, on whether there was a public interest requiring protection from disclosure that was sufficient to override the interests of the administration of justice reflected in the discovery rights given to litigants, and, in the absence of a claim of public interest immunity, there was not.